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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






2. The imbalance between limited productive resources and unlimited human wants






3. 0 < Ei < 1






4. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






5. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






6. The change in quantity demanded resulting from a change in the price of one good relative to other goods






7. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






8. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






9. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






10. The output where ATC is minimized and economic profit is zero






11. Models where firms agree to mutually improve their situation






12. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






13. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






14. Occurs when LRAC is constant over a variety of plant sizes






15. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






16. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






17. ATC = TC/Q = AFC + AVC






18. Entry of new firms shifts the cost curves for all firms upward






19. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






20. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






21. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






22. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






23. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






24. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






25. A good for which higher income decreases demand






26. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






27. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






28. The lost net benefit to society caused by a movement away from the competitive market equilibrium






29. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






30. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






31. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






32. MUx / Px = MUy/Py or MUx/MUy = Px/Py






33. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






34. Es = (%dQs) / (%dPrice)






35. Ed = 8 - infinite change in demand to price change






36. All firms maximize profit by producing where MR = MC






37. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






38. Ed = 0 - no response to price change






39. The marginal utility from consumption of more and more of that item falls over time






40. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






41. The additional cost incurred from the consumption of the next unit of a good or a service






42. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






43. The rational decision maker chooses an action if MB = MC






44. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






45. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






46. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






47. AFC = TFC/Q






48. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






49. Total product divided by labor employed. APL = TPL/L






50. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit